Mats OlaussonSenior AdvisorSustainable Products

The Green Bonds Framework –where it comes from and where it is goingGlobal Infrastructure Basel Summit, 22 May 2014

1

The Green Bond Story

History of the Green Bond market

� A concept developed by SEB and the World Bank in 2007/08

� Linking environmental and financial risks

� Linking short and long term perspectives

� Designed to encourage sustainable investments

2

Green Bonds – in response to investor demand

Increasing number of investors signing off on the 6 Principles for Responsible Investments (PRI) (1)

Source: Unpri.org(1) PRI is an investor driven initiative in partnership with UNEP Finance Initiative and the UN Global Compact(2) ESG=Environmental, Social & Governance

Growing demand for Green investment opportunities amongst global investors

�Incorporate ESG (2) into investment analysis and decision making proces s1

�Incorporate ESG into ownership policies and practic es2

�Seek appropriate disclosure on ESG by entities in w hich we invest3

�Promote acceptance and implementation of the Princi ples within the industry4

�Work together to enhance our effectiveness in imple menting the Principles5

�Report our activities and progress towards implemen ting the Principles6

6.510

13

1821

25

3432

-

200

400

600

800

1,000

1,200

1,400

Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13

0

5

10

15

20

25

30

35

Number of investor signatories

Assets under management, US$ trillion (right axis)

Market development

3

SupranationalsMunici-palities& Cities

Staterelated agencies

ProjectFinancing

Corporates

The Green Bond market

� Engage and educate mainstream stakeholders of the p otential effects climate change can have on financial assets

� To develop solutions that enable existing mainstrea m financial mandates to engage in climate finance

� To create a unified development of the Green Bond m arket

� Across the credit and yield curves with various typ es of issuers

Green Bond market development A fast growing market

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Top Green Bond underwriters 2007 – end of Q1 2014Select Green Bond issues

SEK 500m

2.750% fixed bond

September 2032

Joint Lead

SEK 2,100m

3.000% fixed bond

April 2019

Joint Lead

SEK 500m

2.915% fixed bond/ FRN

October 2019

Sole Lead

USD 500m

0.750% fixed bond

October 2016

Joint Lead

USD 300m

0.875% fixed bond

January 2017

Joint Lead

USD 250m

1.625% fixed bond

April 2018

Joint Lead

USD 1billion

0.625% fixed bond

November 2016

Joint Lead

USD 550m

0.375% fixed bond

Aug 2015

Joint Lead

EUR 250m (increase)

1.375%

Nov 2019

Joint Lead

SEK 1,575m

3.250% fixed bond

December 2017

Sole Lead

SEK 1,300m

1.774% / FRN

May 2016

Sole Lead

SEK 3,250m

3.500% fixed bond

November 2014

Sole Lead

USD 500m

1.750% fixed bond

February 2018

Joint Lead

USD 500m

0.750% fixed bond

Nov 2016

Joint Lead

SEB Green Bond placements

5

Source: Bloomberg and SEB

5 year SEK 1bn/500m

2.500% / FRN

April 2019

Sole Bookrunner

5 year SEK 850m

FRN

April 2019

Sole Bookrunner

SEB in the Green Bond market SEB is a pioneer and the Global leader within the field of Green Bonds

Source: Climate Bond Initiative

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

6

Green Bond issuers

SEB has worked with the following issuers developing their Green Bond frameworks

Issuer Issuer typeProgramme name Allocations

Earmarked a/c

CICERO Second opinion

Investor reporting

World Bank

(IBRD)Supranational Green Bond

� Mitigation

� AdaptationY Y Y

African Development Bank Supranational Green Bond� Mitigation

� AdaptationY Y Y

City of Gothenburg Municipality Green Bond

� Renewable Energy

� Energy Efficiency

� Water Management

Y Y Y

European Bank of Reconstruction and

DevelopmentSupranational Green Bond

� Mitigation

� AdaptationY Y Y

Export Development CanadaExport Import

AgencyGreen Bond

� Renewable Energy

� Energy Efficiency

� Water Management

Y Y Y

European Investment Bank SupranationalClimate

Awareness Bond

� Renewable Energy

� Energy EfficiencyY Y

International Finance Corporation

Supranational Green Bond� Mitigation

� AdaptationY Y Y

Kommunalbanken, Norway Municipality Green Bond� Renewable Energy

� Waste ManagementY Y Y

Korea Export Import BankExport Import

AgencyGreen Bond

� Renewable Energy

� Energy EfficiencyY Y Y

Svenska Cellulosa AB (SCA) Corporate Green Bond

� Sustainable Forestry

� Renewable Energy

� Energy Efficiency

Y Y Y

Skanska Corporate Green Bond� Sustainable

buildingsY Y Y

Vasakronan Corporate Green Bond� Sustainable

Buildings

� Renewable EnergyY Y Y

First Green Bond issuer

First municipalGreen Bond issuer

First non-supranationalGreen Bond issuer

First corporateGreen Bond issuer

First Nordic listedGreen Bond issuer

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The five pillars of the Green Bond framework

Simplicity – scalability1

Governance – selection process 2

Credibility – vetting of Green 3

Traceability – earmarked account4

Transparency – reporting 5

The Green Bond Principles

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� The Green Bond Principles (GBP) are a set of voluntary guidelines for:

- use of proceeds- process for project evaluation and selections

- management of proceeds and - reporting

� The purpose of the GBP is:

to encourage transparency, disclosure and integrity of the Green Bond market

� Signed by 13 + 12 banks

� ICMA Secretatiat:

- facilitate information exchange with issuers, investors, underwriters, and other stakeholders

- gather input for the annual update of the Green Bond Principles

Cautiously welcomed - with strings attached

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NGOs demand clarification:

� include real commitments by banks to ensure high standards of transparency and disclosure for bond issuances they underwrite;

� reference clear and science-based definitions and criteria of what constitutes “green” under the Principles; and

� commit unambiguously to third party, independent verification of the information on sustainability and use of proceeds reported by Green Bond issuers.

At the hart of it - Verification of Green

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1. World Bank2. AfDB3. EBRD4. IFC5. Kommunalbanken6. KEXIM7. EDC8. City of Gothenburg9. Vasakronan10. SCA11. Skanska12. Stockholm County

Council13. Rikshem

1. EDF2. Unibail-Rodamco3. Iberdrola4. Ile-de-France5. GDF Suez

1. Unilever2. Arise

1. Credit Agricole2. TD-Bank3. Toyota4. BAML5. Solar City6. Hannon Armstrong7. NRW Bank8. Landwirtsch

Rentenbank9. FMO10. Massachusetts11. Regency Centers LP12. Aligera Holding

No 2’nd opinion

No official comment:• EIB• NIB• ADB

Green Bonds Framework: where to from here?

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� Other potential providers of third party verification: MSCI, McKinsey, KPMG…?

� Uncertain outcome – a process involving various stakeholders

� Issue at stake: establishing a solid framework to permit the Green Bonds market to grow and make a difference

� Expanding the CICERO model – work in progress

� Purpose of the CICERO – SEB cooperation

- Establish a prudent framework

- Secure the dialogue between banks and academics

� ”Warehousing arrangement” until a prudent model is in place

� Objective to give equal access to all

� Network of environmental research institutes needed to meet demand

� Possible ways forward:

- Consultancy service – banks pay for vetting of green

- Green Bonds Platform (response to investor demand)

* Information services

* Second opinions

Thank you!